Brandes Investment Trust (BVNSC) N-CSRSCertified semi-annual shareholder report (management investment company)

The net asset value of the Brandes International Equity Fund (Class I Shares) declined 25.24% in the six months ended March 31, 2020. During the same period, the MSCI EAFE Index fell 16.52%.

The COVID-19 event created an especially volatile Q1 2020 with a sell-off that was as swift and widespread as anything we have seen since the global financial crisis. While we recognize that the situation remains fluid and has many unknowns, the sell-off has generally broadened and improved our opportunity set. It has also allowed us to add capital to existing holdings, for which we have seen the largest discrepancy between price and our intrinsic value estimate. The increased valuation discrepancy between value and growth stocks (MSCI EAFE Value vs. MSCI EAFE Growth), the improvement in potential investment opportunities and the significant increase in the portfolio’s average margin of safety have led to a rise in portfolio activity and our optimism about the Fund’s return prospects.

Over the six months ended March 31, 2020, results from a country perspective were hampered the most by holdings in the United Kingdom, France and Mexico. From an industry perspective, Fund holdings in the electrical equipment and household products were positive contributors to performance, while holdings in banks, oil, gas & consumable fuels and media detracted from returns.

Three of the largest individual contributors to performance over this time period were Mitsubishi Tanabe Pharma Corporation (Japanese pharmaceutical firm), Schneider Electric SE (France-based electrical equipment company) and J Sainsbury plc (U.K. food retailer). Conversely, Fibra Uno Administracion SA de CV (Mexican real estate investment trust), Embraer S.A. (Brazil-based regional jet manufacturer) and Engie SA (French utility) were three of the largest detractors from performance.

At the start of 2020, we considered the Brandes International Equity Fund as a fairly balanced portfolio. The portfolio had exposure to both cyclically oriented companies and defensive-oriented businesses, without a significant tilt to either area as our company-by-company analysis led to a variety of different value opportunities instead of one or two broad themes.

Our cyclical exposure consisted of several integrated oil companies, which represented an overweight at the beginning of the year, and a variety of banks and other financials, where we held weights roughly equal to the benchmark’s. We did have exposure to select industrials, consumer discretionary and materials companies, but our allocation was less than that of the benchmark as we were concerned that many cyclicals had been overearning and that balance sheet quality had deteriorated. We believe the cyclical holdings we owned generally exhibited a combination of a strong competitive position in their respective industries, a diversified product mix, a deeply discounted price (relative to our assessment of their fundamentals) and in many cases a balance sheet that would allow them to weather a full market cycle.

On the defensive side, our exposure to utilities, consumer staples and health care were roughly equal weight to the benchmark, although our holding composition looked quite different. Our health care exposure was primarily to global pharmaceutical companies. While our consumer staples exposure mainly comprised European food retailers, the benchmark’s allocation was mostly to beverage, personal products and food products companies, many of which had been trading at premiums well beyond what we believed they deserved. We have held our exposure to several European food retailers for a number of years as we believe they offer upside potential as they restructure and seek to turn around their business amid a difficult competitive environment. Over time, we have pared and added to these holdings as market negativity toward them has ebbed and flowed. In addition to the upside potential from their turnaround plans, these businesses also have several defensive qualities we appreciate, including significant property ownership.

Given the dramatic drop in oil prices triggered by the dispute between Saudi Arabia and Russia, it is not surprising that the industry has represented an area of opportunities for us. While we do not make top-down predictions on oil prices, we think it is likely that oil prices below $30 per barrel are unsustainable.

We have focused our investments on select integrated oil companies that not only have the balance sheets required to survive and capitalize on the downturn (based on our analysis), but also maintain relatively low-cost production. Among the holdings that we averaged down on was Italy-based ENI. The company is trading at a lower market value (as of March 31) than it was in 1996. Additionally, ENI boasts a good debt maturity profile, and while its capital expenditure projects are ramping down, the company still has strong production growth.

The market’s indiscriminate sell-off has also weighed on businesses that we believe are well positioned from operational and balance sheet perspectives to weather the economic fallout of the COVID-19 pandemic. An example of such a business within the Fund is Cameco, one of the largest uranium producers globally, providing about 17% of the world's production from its mines in Canada, the United States and Kazakhstan. Owner of several of the largest high-grade mines in the world, Cameco is prominently

We also initiated a position in Heidelberg Cement, the world’s second-largest cement producer. Despite strong free-cash-flow generation, the company’s shares have been under pressure over the past five years. Within its U.S. operations, both residential and infrastructure building (two-thirds of its U.S. business) are depressed, while within its European business, the historically intense competitive environment is improving as industry capacity has decreased. These two operating jurisdictions should benefit significantly if any of the government infrastructure stimulus currently in discussion were to materialize, although it should be noted that this would be just an upside to our valuation as our investment thesis does not hinge on it.

As the world comes to terms with the COVID-19 pandemic and as governments spend huge amounts to stabilize their economies, we are confident that the market will start to favor strong fundamentals, which may—over the long term—bode well for the prices of the companies we own. There are several parallels to other crisis periods: the Asian financial crisis, post September 11, 2001, the global financial crisis and the euro debt crisis. Historically, these periods of extreme volatility, where prices tended to dislocate greatly from value, have often provided what we considered the best access to long-term capital appreciation. We measure that at the company and portfolio levels via margin of safety (discount of market price to our estimate of intrinsic value). We believe that with its average margin of safety currently in the same range as it was during these prior crisis periods, the Brandes International Equity Fund is well positioned for long-term upside potential.

The following chart compares the value of a hypothetical $100,000 investment in the Brandes International Equity Fund – Class I from March 31, 2010 to March 31, 2020 with the value of such an investment in the MSCI EAFE (Europe, Australasia and Far East) Index for the same period.

The sector classifications represented in the graph above are in accordance with Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC.

The net asset value of the Brandes Global Equity Fund (Class I Shares) fell 22.93% in the six months ended March 31, 2020. During the same period, the MSCI World Index declined 14.30%.

From a country perspective, results were hampered the most by holdings in the United States, the United Kingdom and France. From an industry perspective, Fund holdings in the wireless telecommunication services, food products and software were positive contributors to performance, while holdings in banks, media and aerospace & defense detracted from returns.

Three of the largest individual contributors to performance during this period were SoftBank Group Corp. (Japanese conglomerate), Applied Materials, Inc. (U.S.-based semiconductor equipment manufacturing company) and Ingredion Incorporated (U.S.-based food products manufacturer). Conversely, Citigroup Inc. (U.S.-based bank), Embraer S.A. (Brazilian regional jet manufacturer) and Fibra Uno Administracion SA de CV (Mexican real estate investment trust) were three of the largest detractors from performance.

The COVID-19 event created an especially volatile Q1 2020 with a sell-off that has been as swift and widespread as anything seen since the global financial crisis (GFC). We recognize that the situation remains fluid and has many unknowns. However, the sell-off has generally broadened and improved our opportunity set and has also allowed us to add capital to our current holdings where there has been the largest discrepancy between price and our estimate of intrinsic value. The increased valuation discrepancy between value and growth stocks, improvement in potential investment opportunities and a significant increase in the portfolio’s margin of safety have led to a rise in portfolio activity. It has also led us to be optimistic about the return prospects of the Fund.

As we entered 2020, the Brandes Global Equity Fund was positioned quite differently from the broader indices (MSCI World or MSCI ACWI) but not positioned for a particular economic situation. Our cash weighting was slightly elevated relative to the Fund’s history because it was becoming more difficult to find new value opportunities to replace some of the companies sold when they reached our estimates of intrinsic value. This was especially true in the United States where we have had a significant underweight for several years because broad market valuations in the U.S. seemed elevated to us; we therefore believed there were better investment opportunities outside the U.S.

While the low interest-rate, modest economic growth environment would suggest holding defensive, structurally advantaged and/or bond proxy-type companies (e.g., staples, utilities), many of these businesses had been trading at premiums well beyond what we believed was deserved. Instead, we focused on select opportunities, such as U.K. food retailers that have good defensive qualities but had been sold down due to shorter-term Brexit concerns. This allowed us to buy solid businesses at what we

Our other overweight is to the financials sector, which tends to be more economically sensitive to headwinds during a downturn but has been more likely to benefit when the economy starts to recover. However, most of our financial holdings were already priced at such large discounts to our estimates of their intrinsic values that they already fully reflect a recession scenario. We’ve discussed in previous notes how our U.S. bank holdings now have distinctly different financial profiles compared to before the GFC. They now possess very strong balance sheets with excess capital as defined by the Federal Reserve’s punitive stress tests. Many of our holdings (e.g., Wells Fargo, Citi) should benefit from their major investments in technology upgrades; they’re now in a stronger position to lower their cost structures. Wells Fargo may also be able to eventually reduce its elevated legal/administrative expenses.

Generally, our holdings exhibit strong competitive and diversified positions in their respective industries, deeply discounted prices (relative to our assessment of their fundamentals) and balance sheets that we feel will allow them to weather a prolonged economic downturn.

In this time of extreme volatility, we believe the market has overreacted, selling off attractive businesses with strong balance sheets out of fear of the near-term economic impacts from the pandemic. We have long been focused on balance sheet strength when evaluating potential investments. This orientation is paramount today because we’re seeking companies that can not only survive the downturn but capitalize on it to achieve a stronger competitive position. We have also been discussing the merits of taking prudent risks to benefit from price dislocations.

We are in no position to predict the exact outcome of the downturn. It is conceivable that with the right response, many countries could see virus cases de-escalate within the next several months (similar to what has happened in China), or an antiviral could become available in the next several quarters. However, it’s also possible that this issue will last beyond the next couple of quarters. In theory, the fair value of any business is the entirety of its future free cash flows discounted to the present; even if next year’s

We bought new positions in certain industrial, media and technology companies (including but not limited to Heidelberg Cement, Textron, Comcast and Applied Materials) that we haven’t had meaningful exposure to over the past few years. We also increased our positions in Emerson Electric, Publicis, HCA Healthcare, FedEx and Samsung. There are several similar themes in our new investments: each is well positioned, has a strong balance sheet and has traded down to what we regard as a very appealing valuation. Some are more cyclical, such as Textron, Mohawk Industries and Heidelberg Cement; while others are either more defensive (Comcast) or represent good secular growth opportunities (Change Healthcare, Applied Materials, Ingredion).

Health care technology company Change Healthcare is the result of a merger between McKesson’s information technology unit and Change Healthcare in 2017. It went public in 2019. The company offers analytical, communication, payment, consumer engagement and workflow software solutions to its extensive customer base, which covers most hospitals, payers and pharmacies in the United States. We appreciate Change’s exposure to a growing market, its diversified revenue stream and its asset-light and cash-flow generating business model. Trading at just 9x forward earnings, we believe Change represents a compelling value opportunity.

Textron is a defense and aviation business with a relatively strong balance sheet and a diversified customer base. Given its cyclical exposure, the company, which primarily sells highly discretionary big-ticket items (such as business jets, helicopters and specialty vehicles), has been negatively affected by concerns about a potential recession. Nevertheless, we like Textron’s strong free-cash-flow generation, which is partly driven by its significant aftermarket recurring revenue. Additionally, we are comforted by the fact that unlike many other industrials/cyclical companies, Textron’s end-markets were already below mid-cycle demand, based on our analysis. We believed the company’s solid competitive position and balance sheet would help it navigate the current difficult environment and would position it well for a rebound in demand.

Mohawk is the world’s largest floor manufacturer with leading market positions in all flooring categories (i.e., rugs, tile, laminate, vinyl, stone and wood). Its solid market footing, vertical integration, scale, product breadth and fragmented customer base have given Mohawk a significant competitive advantage and has enabled it to generate robust returns on invested capital. Similar to Textron, Mohawk is a cyclical company with a market leadership position and a relatively strong balance sheet whose stock saw a significant price decline (down over 50% during the first quarter). Historically, even during the global financial crisis, the company has generated positive free cash flows thanks to its dominant competitive position. Our analysis found that Mohawk offers a

Heidelberg Cement is the world’s second-largest global cement producer. Despite strong free-cash-flow generation, the company’s shares have been under pressure during the past five years. Within its U.S. operations, both residential and infrastructure building (two-thirds of U.S. business) are depressed, while within its European business the historically intense competitive environment is improving as industry capacity has decreased. These two operating jurisdictions should benefit significantly if any of the government infrastructure stimulus currently in discussion were to materialize, although it should be noted that this stimulus would be just an upside to our valuation as our investment thesis does not hinge on it.

Additionally, we added to several of our oil- and gas-related holdings, including BP and Total, after the Saudi Arabia-Russia dispute erupted. We think that oil prices below $30 per barrel are likely unsustainable. And while we cannot predict when this dispute may be resolved, both countries could experience real national fiscal impairment if the price remains well under $50, so we believe they should eventually be motivated to reach an agreement. Current events could adversely affect near-term profits but also create a more favorable supply-demand environment. Lower prices typically stimulate demand, and cuts in capex typically reduce supply, which can lead to a different future supply-demand equation, potentially to the point where demand outstrips supply. This has happened often in the past after significant oil price corrections.

We have focused our investments on specific integrated oil companies whose balance sheets should allow them to survive and capitalize on the downturn and who also have relatively low-cost production. As an example, ENI trades at a lower market value than in 1996 despite doubling its production since then. It has a good debt maturity profile, and while capex is ramping down the company still has strong production growth.

We are not investing in any pure-play, shale-focused exploration and production companies, as many of these lack the balance sheet and cost structure characteristics we’re seeking. We believe many of these companies will likely have to go through restructuring and/or will be bought at a discount by stronger competitors, some of which may be the large integrated companies we own.

In the early days of the virus situation, we seized on the market’s higher valuations to pare/sell some of our holdings that had enjoyed strong price appreciation but would likely have experienced some COVID-19 consequences.

In the first quarter, we pared NXP Semiconductor and PNC, and sold HSBC and Jefferies. We also reduced our Microsoft shares as its stock price benefitted from being a high-visibility, low-volatility safety trade. More recently, we have been selling certain financials to improve the overall quality of our holdings in that sector and to diversify into others that have been heavily sold off.

Although it may seem counterintuitive in a declining price environment, we may undertake additional selective pares/sells to generate cash and/or invest in other companies that look more attractive from a long-term risk/reward perspective.

At the end of March, the Fund's largest country weights were in the United States and the United Kingdom, and the Fund's largest industry weights were in Pharmaceuticals and Health Care Providers & Services. Please note that while macro conditions are considered when we determine valuation estimates for individual companies, our country and industry weightings are a by-product of bottom-up stock selection, not the result of top-down observations.

As the world seeks to contain and address COVID-19 and as governments spend huge sums to stabilize their economies, we are confident the market will start to favor strong fundamentals: this should bode well for the prices of companies we own over the long term. The current situation has several parallels with prior crises: the Asian financial crisis, post-September 11, 2001, the GFC and the euro debt crisis. Historically, it is periods of extreme volatility when prices deviate entirely from underlying fundamental value that have provided the best opportunities to pursue long-term capital appreciation. We consider these factors at the company and at the portfolio levels by always seeking a margin of safety (discount of market price to our estimate of intrinsic value). At present, the Fund’s portfolio margin of safety has risen to the highest levels we have seen in almost 10 years, which suggests future long-term upside potential.

Return on Invested Capital: Net income minus dividends divided by total capital; used to assess a company's efficiency at allocating the capital under its control to profitable investments.

The following chart compares the value of a hypothetical $100,000 investment in the Brandes Global Equity Fund – Class I from March 31, 2010 to March 31, 2020 with the value of such an investment in the MSCI World Index for the same period.

The sector classifications represented in the graph above are in accordance with Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC.

The net asset value of the Brandes Global Equity Income Fund (Class I Shares) fell 19.35% in the six months ended March 31, 2020. During the same period, the MSCI World Index declined 14.30%.

Fueled by uncertainties surrounding the coronavirus pandemic, global equity markets succumbed to a swift and widespread downturn in the first quarter 2020, which was unlike anything investors have seen since the 2008 global financial crisis (GFC). We recognize that the situation remains fluid and has many unknowns. However, we believe that amid the downturn, there are positive factors to consider for value-focused investors.

The market selloff broadened and improved the value opportunity set, enabling us to add capital to our current holdings exhibiting large discrepancies between price and intrinsic value estimates. Factors such as the increased valuation discrepancy between value and growth stocks, improvement in potential investment opportunities and a significant increase in the Fund’s margin of safety have led to a rise in portfolio activity. These factors also inspire optimism about the future return prospects of the Fund, in our view.

Performance over the six months ended March 31, 2020 was led by contributions from Fund holdings in Germany, while results were hampered by holdings in the United Kingdom, the United States and France. From an industry perspective, Fund holdings in the software, chemicals, and health care providers & services were contributors to performance, while holdings in banks, media and oil gas & consumable fuels detracted from returns.

Three of the largest individual contributors to performance were Microsoft Corporation (U. S. software company), BASF SE (German chemical maker) and Total SA (French-based oil & gas company). Conversely, Fibra Uno Administracion SA de CV (Mexican real estate investment trust), WPP Plc (U. K. media firm) and Wells Fargo & Company (U.S. bank) were three of the largest detractors from performance.

As we entered 2020, the Brandes Global Equity Income Fund was positioned quite differently from the broader indices (MSCI World Index/MSCI All Country World Index). However, we did not attempt to make a particular economic call. The Fund’s cash weighting was slightly elevated because it became more difficult to find a lot of new value opportunities to replace some of the companies we sold when they reached our estimates of intrinsic value. This was especially true in the United States where we had a significant underweight for several years because broad market valuations seemed high and we believed there were better investment opportunities outside the U.S. market.

While the low interest-rate, modest economic-growth environment would suggest holding many defensive, structurally advantaged, and/or bond proxy-type companies (e.g., consumer staples and utilities), we believed many of these businesses had been

Health care was another key allocation. The sector performed well during the downturn. The Fund’s health care holdings, including global pharmaceutical and supply-chain companies, generally offer more attractive fundamentals (i.e., earnings growth and low leverage) but at significantly lower valuations than other defensive stocks commanding a premium, such as those in consumer staples and utilities. If the global economy enters a recession or a longer-than-expected downturn, the Fund’s defensive health care holdings may provide good relative returns.

The Fund also had an overweight position in financials, which is an economically sensitive sector that could materially benefit when the economy eventually starts to recover. On the flipside, the sector may be prone to experience headwinds during a downturn. Nonetheless, most of the Fund’s holdings in financials were already priced at such large discounts to our estimates of intrinsic values and fully reflected a recession scenario. As we mentioned in previous quarterly commentaries, our U.S. bank holdings had distinct financial profiles prior to the GFC and the recent market downturn. These holdings had very strong balance sheets with excess capital, as defined by the Federal Reserve’s punitive stress tests under its Comprehensive Capital Analysis and Review. Many of our holdings (e.g., Wells Fargo and Citigroup) could benefit from major investments in technology upgrades. Additionally, these companies are currently in a strong position to lower their cost structures. Wells Fargo may be able to eventually eliminate its elevated legal/administrative expenses arising from its 2016 fake accounts case.

Generally, the Fund’s holdings exhibited a combination of strong competitive and diversified positions in their respective industries, deeply discounted prices (relative to our assessment of their fundamentals), and balance sheets that we feel will enable these companies to weather a prolonged economic downturn.

In a time of extreme volatility, we’ve observed the market’s overreaction to sell, which included attractive businesses with strong balance sheets that may have been sold out of fear of near-term coronavirus/economic impact. This has presented opportunities, as we always focus on balance sheet strength when evaluating potential investments. This focus is paramount today because we’re seeking companies that have a good chance of surviving the downturn and capitalize on it to achieve a stronger competitive position.

We have also been discussing the merit of taking prudent risks to potentially benefit from price dislocations. We do not simply aim to buy companies with the safest balance sheets. Importantly, we select companies that combine a strong competitive position, a deeply discounted price (relative to our assessment of their fundamentals), and solid balance sheets that allow them to withstand a prolonged economic downturn, should it occur.

We recently initiated a position in German chemical company, BASF. BASF is the world’s largest diversified chemical company and is known for its innovation. The firm also appears to be shareholder oriented, with a strong dividend yield and share buyback history. Given its cyclical exposure, shares in BASF declined over 30% during the quarter and traded down to a level that we consider attractive from a long-term perspective for a well-positioned company with an attractive dividend yield.

The Fund sold its position in Netherlands-based oil & gas company Royal Dutch Shell. The Fund increased its allocation in France-based integrated-oil company Total, as its price declined following the Saudi Arabia-Russia oil production dispute. We believe that Total offers a better risk/reward tradeoff than Royal Dutch Shell.

In our view, oil prices below $30 per barrel are likely to be unsustainable. While we cannot predict when the dispute may be resolved, Saudi Arabia and Russia may experience fiscal impairment if oil prices remain well under $50. For this reason, we believe both countries should eventually be motivated to reach an agreement. Additionally, while current events may adversely affect near-term profits among oil & gas companies, these could also create a more favorable supply-demand environment. Lower prices typically stimulate demand. The reduction in capital expenditure (capex) among oil & gas companies eventually lowers supply, leading to a different future supply-demand equation, potentially to the point where demand outstrips supply. This happened often after significant oil-price corrections.

We have focused our investments on specific integrated-oil companies with balance sheets that could allow them to withstand and capitalize on the downturn, as well as those with relatively low-cost production. We do not invest in any pure play, shale-focused exploration and production companies, as many of them lack the balance-sheet and cost-structure characteristics we seek. We believe many of these companies will likely have to go through restructuring and/or will be bought at a discount by stronger competitors. Some of the acquirers may be the large integrated companies we own.

The Fund added to positions in several companies where we believed the share-price decline was significantly in excess of the change in intrinsic value. These additions included U.K. ad agency WPP, Wells Fargo, South Korea-based tobacco firm KT& G, Japan-based Honda Motor and U.S.-based Johnson & Johnson.

Prior to the market selloff, we seized the opportunity presented by the market’s higher valuations to pare/sell some of our holdings that had enjoyed strong price appreciation

Although it may seem counterintuitive in a declining price environment, we may undertake additional selective pares/sells to generate cash and/or invest in other companies that we deem more attractive from a long-term risk/reward perspective.

At the end of March, the Fund's largest country weights were in the United States and the United Kingdom, and the Fund's largest industry weights were in Pharmaceuticals and Capital Markets. Please note that while macro conditions are considered when we determine valuation estimates for individual companies, our country and industry weightings are a by-product of bottom-up stock selection, not the result of top-down observations.

As the world seeks to contain and address COVID-19 and as governments spend huge sums of money to stabilize their economies, we are confident the market will start to favor strong fundamentals. This should bode well for the prices of companies we own over the long term. The current situation has several parallels with prior crises, including the 1997 Asian Financial Crisis, post-September 11, 2001, the 2008 GFC and the 2011 European debt crisis. Historically, periods of extreme volatility, when prices deviate considerably from underlying fundamental value, have provided appealing opportunities for long-term capital appreciation. We consider these factors by always seeking a margin of safety (discount to our estimate of intrinsic value). At quarter end, the Fund’s margin of safety has risen to the highest levels we have seen since the inception of the Brandes Global Equity Income Fund, which suggests future long-term upside potential.

Capital Expenditure (Capex): An expense a company makes towards the purchase of new equipment or the improvement of its long-term assets, namely property, plant, and equipment.

The following chart compares the value of a hypothetical $100,000 investment in the Brandes Global Equity Income Fund – Class I from its inception (December 31, 2014) to March 31, 2020 with the value of such an investment in the MSCI World Index for the same period.

The sector classifications represented in the graph above are in accordance with Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC.

The net asset value of the Brandes Emerging Markets Value Fund (Class I Shares) declined 28.11% in the six months ended March 31, 2020. During the same period, the MSCI Emerging Markets Index fell 14.56%.

From a country perspective, the Fund benefited from holdings in the United Arab Emirates, Austria and Taiwan, while results were hampered by holdings in Mexico, Brazil and South Korea. In terms of industry, Fund holdings in transportation infrastructure, internet & direct marketing retail and air freight & logistics positively contributed; while holdings in banks, real estate investment trusts (REITs) and media detracted from returns.

Three of the largest individual positive contributors to performance were YDUQS Participacoes S.A. (Brazilian educational services provider), DP World PLC (UAE-based logistics company) and Alibaba Group Holding Ltd. (Chinese technology firm). Conversely, Embraer S.A. (Brazilian regional jet manufacturer), Fibra Uno Administracion SA de CV (Mexican REIT) and Hyve Group PLC (U.K.-domiciled event organizer) were three of the largest detractors from performance.

As we entered 2020, the Brandes Emerging Markets Value Fund had undergone a gradual but meaningful shift over the previous few years. The weighting to companies in Brazil and Russia had decreased as many of our holdings there appreciated to our estimates of their intrinsic values, prompting us to sell the positions. We used some of the proceeds from the divestments to initiate or add to positions in China and the information technology sector, as valuations for select companies became more attractive to us amid market concerns about the trade war and its effects on economic growth. Our allocation to these two areas has nearly doubled over the past two years, although we remained significantly underweight compared to the benchmark at the beginning of the year. Additionally, unlike the Chinese constituents of the MSCI Emerging Markets Index, which are mostly financial or technology-related businesses, our China-based holdings operate in a diverse set of industries.

As one would expect from a value portfolio, the Fund certainly has exposure to cyclical stocks. We remain cognizant of the different stages in the industry cycles to which our holdings are exposed; some of our cyclical holdings had been overearning in a prolonged economic growth environment, while others were earning well below mid-cycle levels prior to the recent downturn. We take comfort in our view that the cyclical companies we own generally exhibit a combination of a strong competitive position in their respective industries, a diversified product mix, a balance sheet that we feel will allow them to weather a full market cycle, and importantly, a deeply discounted price (relative to our assessment of their fundamentals).

New purchases during the first quarter included Zee Entertainment Enterprises, one of India’s leading television and media companies, and the Bank of the Philippine Islands.

The investment committee also initiated a position in Lukoil. In our view, the Russian integrated oil & gas firm represents an example of a compelling value opportunity we found in the sell-off of energy firms driven by the dramatic drop in oil prices. We think it is likely that oil prices below $30 per barrel are unsustainable.

Lukoil is a company that we are very familiar with, as we had owned it for nearly a decade up until early 2019 when it appreciated to our estimate of its intrinsic value, leading us to sell the position. As with our other integrated oil holdings generally, Lukoil has, in our opinion, the balance sheet strength and low-cost production profile that are necessary for navigating the challenging oil-price environment.

In addition to initiating a position in Lukoil, we averaged down on and selectively increased the target allocations for other oil & gas holdings, including PetroChina and Brazil-based Petrobras.

Another area that has been hit particularly hard by the economic impact of COVID-19 is the tourism industry, so it is not surprising that it has represented an area of opportunities for us. We added to our positions in Wynn Macau and TravelSky Technology, while initiating a position in Galaxy Entertainment, a Macau-based company that operates three luxury resort casinos in the region. Investor sentiment toward Galaxy soured with the travel restrictions for visitors from mainland China and Hong Kong, as well as the closure of casinos for two weeks in February. We believe that Wynn Macau’s and Galaxy’s liquidity resources (Galaxy has a large net-cash position) should enable them to endure the current depressed visitations.

While most of the activity so far this year has mainly revolved around adding new companies or averaging down on existing holdings, we did sell a few positions that either appreciated to our estimates of their intrinsic values or we believed we could reallocate into opportunities that have become more attractive. These included Brazil-based health care company Hapvida Participacoes, educational services

As the world comes to terms with the COVID-19 situation and as governments spend huge amounts to stabilize their economies, we are confident that the market will start to favor strong fundamentals, which may—over the long term—bode well for the prices of the companies we own. There are several parallels to prior crisis periods: the Asian financial crisis, post September 11, 2001, and the global financial crisis. Historically, these periods of extreme volatility, where prices tended to dislocate greatly from value, have often preceded access to long-term capital appreciation. We measure that at the company and portfolio level via margin of safety (discount of market price to our estimate of intrinsic value). With its average margin of safety currently in the same range as it was during these prior crisis periods, we believe the Fund is well positioned for long-term upside potential.

The following chart compares the value of a hypothetical $100,000 investment in the Brandes Emerging Markets Value Fund – Class I from March 31, 2010 to March 31, 2020 with the value of such an investment in the MSCI Emerging Markets Index for the same period.

The net asset value of the Brandes International Small Cap Equity Fund (Class I Shares) fell 22.57% in the six months ended March 31, 2020. During the same period, the S&P Developed Ex-U.S. SmallCap Index declined 20.43%.

From a country perspective, positive contributors were led by holdings in Germany, Ireland and Russia; while results were hampered by holdings in the United Kingdom, Mexico and Brazil. In terms of industries, Fund holdings in the health care equipment & supplies, pharmaceuticals and trading companies & distributors industries were contributors to performance; while holdings in commercial services & supplies, equity real estate investment trusts (REITs) and aerospace & defense detracted from returns.

Three of the largest individual positive contributors were Draegerwerk AG & Co. KGaA Pref (German– medical equipment manufacturer), Avadel Pharmaceuticals Plc (Ireland-based pharmaceutical firm) and Mills Estruturas e Servicos de Engenharia S.A (Brazilian construction equipment rental company). Conversely, Embraer S.A. (Brazil-based regional jet manufacturer), Fibra Uno Administracion SA de CV (Mexican REIT) and MITIE Group PLC (U.K.- based facility management company) were three of the largest detractors from performance.

Over the last several years as market participants appeared to be increasingly willing to pay more for risk, our portfolio has generally shifted away from risk. This has produced large underweights to companies exhibiting cyclically elevated earnings, as well as stretched balance sheets and valuation multiples. On the contrary, the Fund has had an elevated cash position and has been heavily skewed to attractively priced, mature businesses with generally defensive characteristics and strong balance sheets. This positioning was not tactical, but rather a function of our sharp focus on price and long-term value.

The COVID-19 event has generated a considerable amount of what we view as indiscriminate selling, which has created select opportunities and inefficiencies that we have been excited to exploit. There are echoes of the asset class appreciation experienced in 2017, but in reverse and more quickly.

When grouped by style, value-oriented sectors, especially cyclicals (i.e., financials, energy, industrials and materials), have led the market decline. This reminds us of other precipitous market downturns such as the global financial crisis (GFC) and the euro crisis.

Many companies with relatively high financial leverage have sold off, regardless of their competitive positioning or other fundamental characteristics. Similar to what we saw in 2008/09, the sell-off is broad-based and seems to be hitting companies with weaker balance sheets the most. Additionally, relative to large caps, small caps have meaningfully underperformed—both domestically and internationally.

Companies directly affected by the fall in oil price and those experiencing a declining demand as an immediate result of the coronavirus have felt the brunt of the correction. We believe the market could be underestimating the secondary impacts to demand and gross domestic product. Companies perceived as high quality/growth may have a reckoning later in the cycle. This was what happened during the GFC when industry leaders initially outperformed but later suffered as the market realized that their high valuations had not been justified.

The small-cap investment committee has been closely monitoring opportunities we have previously priced and evaluating new ideas that have fallen into our market-cap range. The team has been meeting several times a week to discuss the evolving opportunity set, and is ready to take action as opportunities arise. One of the little-recognized benefits of our firm’s structure is that the small-cap team can leverage research previously supplied to our small/mid-cap and large-cap teams. In addition to sourcing ideas from the firm’s monitoring lists, our research group has been hard at work pricing new ideas that are beginning to offer significant upside potential.

So far, the Fund’s portfolio positioning has not changed much, with continued large underweights to cyclicals and a continued sharp focus on balance sheet durability. Should opportunities in more economically sensitive industries expand, balance sheet strength will be a key driver of our purchase decisions.

We added more than 10 companies operating in a diverse set of sectors/industries. Among the new purchases were Kingfisher, Cameco, Marks & Spencer, Hankook Tire, Bankia and Danieli.

Italy-based Danieli primarily sells equipment for steel plants, competing in a niche industry where the top three players, one of which is Danieli, have approximately 20-25% market share each. Most of Danieli’s production is in Italy.

Down over 30% year to date, Danieli’s stock is an example of the apparently indiscriminate market selling that has taken place. For decades, through multiple market cycles, Danieli has generated stable free cash flow and a low double-digit return on equity. Despite this strength, the company is trading at what we see as very attractive valuation levels, less than 10x forward earnings and 40% of tangible book value as of March 31. Even more indicative of the undervaluation, in our opinion, is the fact that prior to the sell-off, the company had a negative enterprise value, where net cash and

In addition to making new purchases, we also had the opportunity to average down on and increase the target allocations on a number of existing positions. Our focus has been to try to identify those businesses where the share-price decline significantly outpaced the change in our intrinsic value estimates. Komori is a great example of this. A global leader in a three-player oligopoly, the Japanese printing presses manufacturer was trading below its net cash and investments prior to the sell-off. Despite this, the stock price was down 30% in the quarter, underperforming many of the deep cyclicals that we have been monitoring. In fact, most of our high net-cash Japanese small caps have sold off with the broader market, and we took the opportunity to accumulate more shares in these defensive and attractively priced securities. The same was true for many of our consumer staples holdings, which were overall positive contributors to relative returns but declined over 20% on an absolute basis in the first quarter. For example, C&C Group was down over 50%, and trading at just 9x earnings while paying a 6% dividend yield (as of March 31). The company was founded in the early 1900s and sells branded beer and cider with strong market shares in Ireland (70% of cider market) and Scotland (50% of beer). We believe this is a great business at an extremely attractive valuation.

We are beginning to see exciting opportunities in select areas, such as European industrials and energy, but we remain wary of companies that have what we consider stretched valuations and too much balance sheet leverage. While we have long been focused on balance sheet strength when evaluating potential investments, we believe this focus is paramount today as we’re looking for companies that are not only well equipped to survive a downturn, but also in the position to come out of it with a stronger competitive position.

As the world comes to terms with the COVID-19 situation and as governments spend huge amounts to stabilize their economies, we are confident that the market will start to favor strong fundamentals, which may—over the long term—bode well for the prices of the companies we own. There are several parallels to other crisis periods: the Asian financial crisis, post September 11, 2001, the global financial crisis and the euro crisis. Historically, these periods of extreme volatility, where prices tended to dislocate greatly from value, have often preceded access to long-term capital appreciation. We measure that at the company and portfolio levels via margin of safety (discount of market price to our estimate of intrinsic value). With its average margin of safety currently in the

The following chart compares the value of a hypothetical $100,000 investment in the Brandes International Small Cap Fund – Class I from March 31, 2010 to March 31, 2020 with the value of such an investment in the S&P Developed Ex-U.S. SmallCap Index for the same period.

The net asset value of the Brandes Small Cap Value Fund (Class I Shares) declined 18.94% in the six months ended March 31, 2020. During the same period, the Russell 2000 Index fell 23.72%.

During this time period, the Fund’s performance was aided by holdings in the pharmaceuticals, biotechnology and food products industries, while holdings in machinery, oil gas & consumable fuels and aerospace & defense detracted from returns. From a company perspective, three of the largest individual contributors to performance were Avadel Pharmaceuticals Plc, consumer products company CSS Industries and PDL BioPharma. Conversely, small machinery producer Briggs & Stratton Corporation, jetmaker Embraer S.A. and Chesapeake Energy Corp were three of the largest detractors from performance.

To be sure, the COVID-19 event created an especially volatile Q1 2020 with a sell-off as swift and as widespread as anything seen since the global financial crisis (GFC). We recognize that the situation remains fluid and has many unknowns. However, the sell-off has generally broadened and improved our opportunity set. We have acquired a number of new securities, most at prices which were down close to 40-60% over the trailing 12 months and down 30-60% year-to-date through March 31, 2020, creating attractive entry points for us. These purchases were funded mostly with cash on hand.

We added seven companies from a diverse set of sectors/industries. Among the new purchases were specialty retailer Aaron’s; food and staples retailer Weis Markets; poultry producer Sanderson Farms; food and staples retailer Ingles Markets; and energy, transportation, and construction infrastructure manufacturer L.B. Foster Company

We’ve also taken the opportunity to average down on and increase our target allocation in a number of existing positions. These include communications equipment company Netgear; fresh egg producer Cal-Maine Foods; energy, commodities, and services company World Fuel Services; biotechnology company United Therapeutics, homebuilder Taylor Morrison Home; oilfield services company Halliburton; aerospace and defense conglomerate Textron; health care technology company Change Healthcare; and motorcycle manufacturer Harley-Davidson. and health insurer Triple-S Management.

Halliburton (HAL) is the second-largest oilfield service company in the world. The company has dominant market positions in products and services that require significant operational efficiency with modest technical knowhow. This status is best reflected in HAL’s leading standing in pressure pumping, a key service needed to finish unconventional shale wells. Its strong growth in capital expenditures in the U.S. over the past two years has allowed HAL to outpace its multinational peers.

The company’s stock price has decreased by more than 70% this year and is a casualty of the price war between Saudi Arabia and Russia, plus the market’s negative response

As the world comes to terms with the coronavirus situation and as governments spend huge amounts to stabilize their economies, we are confident that the market will start to favor strong fundamentals which may—over the long-term—bode well for the prices of the companies we own. There are several parallels to other crisis periods. Historically, these periods of extreme volatility, when prices tended to dislocate greatly from value, have often preceded long-term capital appreciation. We measure that at the company and portfolio levels via margin of safety (discount of market price to our estimate of intrinsic value). With its average margin of safety currently in the same range as it was during these prior crises, we believe the Brandes Small Cap Value Fund is well positioned for upside potential over the long term.

The following chart compares the value of a hypothetical $100,000 investment in the Brandes Small Cap Value Fund – Class I from March 31, 2010 to March 31, 2020 with the value of such an investment in the Russell 2000 Total Return Index for the same period.

The net asset value of the Brandes Core Plus Fixed Income Fund (Class I Shares) increased 2.13% in the six months ended March 31, 2020. During the same period, the Bloomberg Barclays U.S. Aggregate Bond Index rose 3.33%.

Coronavirus, lockdown, shelter in place, self-quarantine and social distancing were not part of the normal lexicon but have quickly become the ubiquitous language defining this unusual period.

Within fixed income, both investment-grade and high-yield corporate bonds experienced historic declines in March, with the Bloomberg Barclays U.S. Credit Index posting its worst month of excess returns (versus similar maturity U.S. Treasuries) in the index’s history.

Amid heightened volatility during this time, there were cries among some investors that the fixed-income market was broken, until the Federal Reserve (Fed) stepped in with a stimulus package that has the potential to make the 2008 Global Financial Crisis (GFC) intervention look like child’s play.

The Fed certainly dug deep within its tool kit in an attempt to mitigate market damage. Among the central bank’s biggest moves included a reduction of the federal funds rate to zero, the intention to purchase as many U.S. Treasury and agency mortgage-backed securities (MBS) as necessary, and the creation of a new facility that will purchase investment-grade corporate bonds and exchange-traded funds (ETFs) in the primary and secondary markets. The net result is that the Fed can potentially triple the size of its balance sheet from pre-pandemic levels if it fully utilizes its announced emergency lending capacity. During March, the Fed purchased $843 billion of U.S. Treasury securities and $292 billion of Agency MBS—for a combined total of $1.1 trillion.¹

To put those figures in context, prior to March 2020, the Fed’s third round of formal quantitative easing from September 2012 to October 2014 totaled $1.6 trillion in U.S. Treasury and agency MBS. Additionally, estimates coming into the year projected agency MBS net supply for 2020 around $285 billion, which means the Fed just effectively purchased 102% of projected net annual supply over a couple of weeks in March.²

As far as the market being broken—unlike during the GFC—the primary market activity was robust and active for issuers with solid credit fundamentals and investors well positioned in their portfolios with cash and U.S. Treasuries to spend. During the last full week of March, the investment grade primary market saw 49 issuers price

The Fund’s weightings favored shorter-maturity corporate bonds which also helped performance. The average duration of the Fund’s corporate holdings was under three years for much of the period, until the last two weeks of the first quarter when purchase activity extended the duration to just above three years. The average duration of corporate bonds in the benchmark was approximately eight years. During the first quarter, 1-3 year maturity investment-grade corporate bonds outperformed 7-10 year maturity corporate bonds by over 10%.

Furthermore, our underweight to agency MBS aided returns. While agency MBS staged a fierce rally after the Fed announced a direct purchase program of agency MBS in March, they still underperformed U.S. Treasuries during the period.

Detracting from returns was the Fund’s overall duration position. The duration was positioned within a band of approximately 80% to 89% of the benchmark’s duration during the first quarter. This positioning detracted from relative returns as interest rates fell dramatically across the yield curve.

Within corporate bonds, our allocation to the energy industry was the largest detractor from returns. Prior to the pandemic, the industry was already dealing with the challenge of low oil and natural gas prices from a relatively benign winter season. The coronavirus pandemic created a more acute demand shock and production disagreements between Saudi Arabia and Russia, leading to a supply shock. The combination of lower demand and increased supply sent oil prices to the lowest levels in 18 years.

Toward the end of the first quarter, we viewed the dramatic corporate-bond market selloff as an opportunity to add to a number of existing holdings. These included Netflix (2021 maturity), Avon Products (2022 maturity), Wyndham Destinations (2023 maturity), Iron Mountain (2027 maturity) and JPMorgan (perpetual floating rate note). We added one new holding in Charter Communications (2025 maturity). The total size of the additions was between 2.5% to 3% of the portfolios. We used a combination of cash, U.S. Treasuries and proceeds from a Wells Fargo holding that was called in mid-March to fund the purchases.

The consistent themes running through the portfolio's purchase activity was a preference for shorter maturities and allocation to credits that we believe have resilient and repeatable cash flows during this time of heightened uncertainty.

Does anyone remember that in late 2008/early 2009, there were three separate rallies in the broad U.S. equity indices of at least 20% before the equity market (and the credit markets) found an ultimate bottom in March 2009?

In our view, there are currently more unknowns in the market than at any time since the dark days of the GFC in 2008/2009. It is simply difficult, if not impossible, to accurately predict the depth and breadth of the human and economic damage from this pandemic.

Investors and pundits want to believe in a robust rebound, such as a V-shaped recovery, but basic belief is not a sound investment philosophy, in our opinion. We feel that the current investment environment requires continued patience to get a holistic picture of the extent of the economic damage.

While we feel it is too early and potentially dangerous to declare this period as the time to buy, we do think that it is a time to buy. Fundamental values have improved—this is what we believe matters most to long-term performance. For example, value opportunities have emerged among fundamentally solid credits sold by investors needing to raise cash in a market downturn, as technical dislocations have been a prominent feature over the past few weeks.

In this challenging investment environment, we remain on the lookout for opportunities to thoughtfully redeploy cash and U.S. Treasuries into value-oriented securities, as we continue our measured, deliberate and cautious approach in reallocating capital in the coming months.

The following chart compares the value of a hypothetical $100,000 investment in the Brandes Core Plus Fixed Income Fund – Class I from March 31, 2010 to March 31, 2020 with the value of such an investment in the Bloomberg Barclays U.S. Aggregate Bond Index for the same period.

As a shareholder of a Fund, you incur ongoing costs, including investment advisory and administrative fees and other fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from October 1, 2019 to March 31, 2020 (the “Period”).

This section provides information about actual account values and actual expenses. The “Ending Account Value” shown is derived from each Fund’s actual return. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for the Fund under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.